Social and Behavioral Sciences Commons^™

Distortionary Taxation And Labor Market Performance, Riccardo Fiorito, Favio Padrini

riccardo fiorito

We construct quarterly estimates of consumption, labor and capital tax rates for several Oecd countries. We use then the stylized facts methodology - and also some structural analysis - to evaluate the relation between tax rates and labor market variables. The main policy result is that reducing tx rates on factors (labor, especially) notably increases employment and labor supply but has a smaller effect on unemployment because the two effects widely compensate.